2018 (2) TMI 1068 - AT - Customs

Benefit of N/N. 21/2002 (Sl.No.140) - import of parts of snap buttons - Revenue, after clearance of the goods, took the view that this exemption notification is not applicable to parts of snap buttons - Held that - reliance placed in the case of KITEX GARMENTS LTD. Versus COMMR. OF CUS., COCHIN 2009 (3) TMI 454 - CESTAT, BANGALORE , where it was held that the benefit to be extended to parts. The snap button consists of 4 parts, a single part in isolation does not have any use at all. If one part is imported, all the other parts also have necessarily to be imported for use. In such circumstances, the part also would be covered by entry No.140. Any other interpretation would lead to absurdity - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against customs duty demand on imported parts of snap buttons under exemption Notification No.21/2002.

Analysis:
1. Background and Contentions: The appellant imported parts of snap buttons and cleared them at a 'nil' rate of duty under exemption Notification No.21/2002. The Revenue later contended that the exemption did not apply to parts of snap buttons, leading to duty demand against the appellant. The appeals were filed against Order-in-Appeal No. 511-2007 and Order-in-Appeal No. 512-2007.

2. Arguments: The appellant argued that Rule 2(a) of the General Rules of the interpretation of the Customs Tariff Act, 1975, implies that the term "button" includes its parts. They highlighted that all parts were used in garments that were manufactured and exported. The appellant emphasized that a single part alone had no use and all parts needed to be imported for use, making them eligible for exemption under entry No.140 of the relevant notification.

3. Tribunal's Decision: The Tribunal referred to a previous decision (Final Order No.673/2009) where it was observed that all parts together make up the snap button, and each part had been imported separately. The Tribunal noted that the appellant fulfilled the conditions of the notification by using the imported parts in garments that were subsequently exported. It was concluded that demanding duty on the imported goods was unjustified, and the appeal was allowed with consequential relief.

4. Conclusion: Following the precedent set by the Tribunal's earlier decision, the impugned order was set aside, and the appeals were allowed. The Tribunal's decision highlighted the importance of considering the practical application and usage of imported parts in determining their eligibility for duty exemption under relevant notifications.